Office of
Sponsored Programs

Postaward Guidelines

Procurement of Services

cooking400_1_.jpgDefinition and Description of  Consultants, Vendors, and Subrecipients

Sometimes, SIT will procure the services of a third party in order to meet specific needs of individual research projects.  These services share a common goal in that they are obtained in order to meet the stated objectives of the project; however, they differ substantially in the way federal sponsors and SIT regard their presence and contribution to the project, the manner in which their services are obtained, the type of procurement document, the amount of SIT direction and oversight, and the expected deliverable.  Generally, these third party services are divided into the roles of a consultant, vendor, and a subrecipient.  This discussion focuses on how to determine exactly which type of relationship is needed.

Consultants (individuals or entities external to SIT)

“An individual retained to provide professional advice or services for a fee but usually not as an employee of the requiring organization.  Consultants also includes a firms that provide paid professional advice or services.”  NIH Grants Policy Statement – See “Allowability of Costs / Activities – Selected Items of Cost – Consultant Services (Rev. 12/03, page 89) . 

How federal sponsors and SIT regard their presence and contribution to the project

Typically, consultants provide expertise unavailable, or at a level unavailable, at the PI’s institution; therefore, it’s normal that these individuals are not SIT personnel.    A consultant’s role is one of an outside expert and typically involves only a few days.  A distinction worthy of note is that while a consultant’s participation is generally limited in duration, he/she may be involved throughout the course of the entire grant period, but usually only a few days at a time.  Consulting rates vary depending on the discipline, amount of education and experience, and other market considerations; however, using the federal government’s GS-18 pay-rate as a comparison should provide a reasonable median.

IMPORTANT NOTE:  The federal government expects that faculty will consult with each other in a collegial way to provide and exchange information and expertise.  If SIT personnel are used in this capacity, they should be referred to as “scientific advisors.”

How their services are obtained

The consultant’s presence and role should be mentioned within the budget category entitled “Consultant” and in the budget justification.  It’s normal to have a letter from the individual, or firm, acting as a consultant.  The letter will state their knowledge of, and agreement to, being named as a consultant in the proposal.  The letter also will state the amount of their compensation.  All travel, per diem, and taxes are the responsibility of the consultant and should be factored into the stated compensation amount.
The type of procurement vehicle:

The PI’s department works with the SIT Logistics function in order to issue a Service Contract for the consultant’s services.  If the consultant is specifically named within the proposal, this serves as a sole source justification.  The contract should specify whether the PI expects a formal deliverable.

Amount of SIT direction and oversight

There is no direction or oversight since this is a service procured to provide expertise and consultation.

Expected deliverable

Normally, the PI or other key personnel converses  with the consultant on various points or items specific to the research project; therefore, the deliverable may be phone conversations, exchanges of e-mail, verbal face-to-face conversations, or a formal written report.  The PI should specify in the Service Contract whether a written report is required.

IMPORTANT NOTE:  Faculty at other universities, depending upon their institution’s policies, often operate as consultants.  It is important to note that a consultant acts upon his/her own initiative in their role as a private individual.  They are not representing their university and typically any use of their university’s facilities is not allowed.  Also, the tax liability for their compensation becomes their personal responsibility.  

SIT’s full F&A rate is applied to the consultant category; this is considered a work-for-hire and any intellectual property belongs to SIT.  

Vendors

A vendor is a dealer, distributor, merchant or other seller providing goods or services that are necessary for conducting a federal program. 

How federal sponsors and SIT regard their presence and contribution to the project

Typically, a vendor provides goods or services that may be for an organization’s own use or for the use of beneficiaries of the federal program.  Additionally, a vendor

  • Provides goods and services within normal business operations;
  • Provides similar goods or services to many different purchasers;
  • Provides goods or services that are ancillary to the operation of the Federal program;
  • Operates in a competitive environment;
  • Is not subject to the compliance requirements of the Federal program. OMB Circular A-133, Subpart B, Section .210

How their services are obtained

The vendor’s presence and role should be mentioned within the budget category entitled “Other Expenses” and in the budget justification.  It’s normal to have a letter, on company letterhead, from the individual, or firm, acting as a vendor.  The letter will state their knowledge of and agreement to the provision of services being mentioned in the proposal.  The letter will also state the cost of their services.  This cost will be all-inclusive and there will be no additional compensation.

Type of procurement vehicle

The PI’s department works with the SIT Logistics function in order to issue a Purchase Requisition, or a Contract depending on the amount, for the vendor’s services.  The requisition should specify the expected deliverable.  If the PI has already identified a specific vendor in the proposal this usually suffices as the required justification for the sole source award. OMB Circular A-110, Subpart C, Section .46.

Amount of SIT direction and oversight

The vendor receives a detailed description of the services being purchased and exercises no independent judgment regarding execution of the work or the outcomes, other than what might be considered a part of the vendor’s normal provision of services.  For example, the vendor by virtue of the nature of their business, may have software that provides trend forecasting or demographic analysis.  This type of analysis, while important to the project, does not represent independent judgment in execution of the work or outcomes.  At all times, the SIT PI is in charge of the project and incorporation of the vendor’s data within the overall project scope. 

Expected deliverable

As previously mentioned, this is a procurement of services; therefore, a specific deliverable is anticipated.  This may be a report, but usually takes a more definite form such as survey results, assays, analyses, etc. The Purchase Requisition or Contract should specify the nature of the expected deliverable.
SIT’s full F&A rate is applied to the vendor category; this is considered a work-for-hire and there is an employer/employee relationship between SIT and the vendor; any intellectual property belongs to SIT. 

Subrecipients

A subrecipient is an institution, company or organization that receives, at any tier, financial assistance that is passed down from a prime sponsor.

How federal sponsors and SIT regard their presence and contribution to the project

The responsibility of a subrecipient is to help SIT meet the requirements of a federal award and a subrecipient’s performance is measured against meeting the objectives of the prime grant or contract.  The portion of work being performed by the subrecipient constitutes a significant component of the research program, and the subrecipient is required to provide the resources necessary to conduct that portion of the work.  This includes providing a responsible investigator at the work site of the cooperating entity to oversee the program activities.  A subrecipient receives financial assistance from SIT to carry out a program and the funds awarded to the subrecipient will be used to carry out a program of that third party as compared to providing goods or services for SIT’s program.  These relationships are referred to variously as subcontracts, subawards, subrecipient agreements, and subgrants.  The terminology is less important than the procedures established by SIT to describe, procure, monitor and collaborate with the organizations.  Typically, a subrecipient is a state or local government, college, university, or non-profit organization that expends federal awards received from a primary recipient entity to carry out a federal program.  However, it is permissible for a subrecipient to be a for-profit entity.  Under a subaward a subrecipient organization generally

  • Determines who is eligible to receive what Federal financial assistance;
  • Has its performance measured against whether the objectives of the Federal program are met;
  • Has responsibility for programmatic decision-making;
  • Has responsibility for adherence to applicable Federal program compliance requirements; and
  • Uses the Federal funds to carry out a program of the organization as compared to providing goods or services for a program of the primary recipient entity. OMB Circular A-133, Subpart B, Section .210

How their services are obtained

The subrecipient’s presence and role should be mentioned within the budget category entitled “Contractual / Consortium Costs” and in the budget justification.  It’s normal to have a Statement of Work, a budget, and a letter or document of commitment from the subrecipient organization signed by an authorized institutional official.  The letter will state their knowledge of and agreement to the provision of services described in the proposal.  The letter also will state the cost of their services.  Although the majority of subrecipient relationships are to other universities, this is not always the case.  Non-profit and for-profit entities also are potential subrecipients.  The nature of the organization’s participation rather than the type of organization defines their role.  

SIT’s Office of Sponsored Research (OSR) issues Subrecipient Agreements to describe, define and bind the relationship between the entities.  The Agreement contains all Contract Provisions listed in Attachment A of OMB Circular A-110, and incorporates all required elements mentioned in OMB A-110 and A-133, including monitoring, approved budgets, and Statements of Work.  The Subrecipient Agreement is signed by the SIT PI as an acknowledgement of the content, executed by the subrecipient organization and fully executed by the Director of OSP, or the appropriate designee.  If the PI has already identified a specific subrecipient in the proposal this may serve as part of a sole source justification. 

Amount of SIT direction and oversight

As previously stated, the subrecipient organization has responsibility for programmatic decision-making regarding the goals and objectives included in their Statement of Work.  Additionally, the sub’s performance is measured against whether the stated objectives of the federal (for consistency, “federal” should be upper OR lower case throughout) award are met, whether they adhere to the goals in their Statement of Work, and if they produce the expected deliverable.  While the PI at SIT retains primary responsibility for the overall direction and execution of the project, his/her interaction with the PI at the subrecipient organization is primarily one of collaboration and collegial effort rather than direction or oversight.

The amount of SIT’s administrative direction and oversight is considerable.  The fact that the subrecipient is receiving federal funds in order to accomplish program objectives means that SIT must monitor the sub’s activity and progress on the project.  Several factors determine the level of monitoring applied to each subrecipient and those specifics are discussed in a separate procedure entitled “Subrecipient Agreement Issuance and Monitoring.” 

Expecte deliverable

Normally the anticipated deliverables are both scientific and fiscal reports that describe the results of the subrecipient’s efforts.

IMPORTANT NOTE:  SIT’s full F&A rate is applied to only the first $25,000 of each subrecipient agreement.  For example, if SIT has a subrecipient that receives $50,000 total costs in each year of a five-year award, SIT applies its full F&A rate to only $25,000 total costs in the first year of the award.  The remaining $25,000 in the first year does not have any F&A applied.  Years two through five of the award also are without any SIT F&A. A subrecipient is considered an independent contractor.  There is no employer/employee relationship between SIT and the sub, this is not considered a work-for-hire and issues of intellectual property are generally negotiated between the parties.  Other universities generally enjoy the same rights and privileges accorded to all institutions of higher education by the federal government. 

The following OMB Circulars are located on Government sites:

A-21 “Cost Principles for Educational Institutions; and

A-110 “Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations”
A-133 “Audits of States, Local Governments, and Non-Profit Organizations”
NCURA’s “A Guide to Managing Federal Grants / Managing Subrecipient Awards”